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Buy New Furniture After Closing

While it's long been a practice of lenders to check the credit and financial condition of borrowers again not long before a real estate closing, it's now been mandated by Fannie Mae.  And, with the new mortgage climate, delays or outright denial of the mortgage can happen based on financial activities of the borrower between when they first received loan approval and the closing.

Delay can happen when a borrower makes a significant credit card purchase just prior to closing, say to buy some new furniture for the home.  If their credit score was on the edge of one of the thresholds that determine interest rates, like 680 or 720, a drop of only a point or two in score can result in an increase in interest rate.  With the rule requiring a three day waiting period when interest rates change, the closing could be delayed.  But, it's more about that rate increase that can increase the monthly payment, and possibly even result in disqualification for the loan.

It's not just on the purchase side either.  A job change can create problems as well.  Lenders are now required by Fannie Mae to be more diligent in confirming the ability of the borrower to satisfy the terms of the mortgage and pay the mortgage payments as agreed.  A job change, especially with a salary decrease, even small, could trigger a delay or decline of the mortgage already approved.

Borrowers are being advised to pay careful attention to maintaining their financial status as it was when they were approved for the loan.  Borrow the money from a relative if necessary to have major repairs done to the car or other emergency purchases.  Leave all discretionary purchases until after closing.

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